Business plans underpin all new business activities, providing the necessary key elements to take action and realize results.

As indispensable as a roadmap, recipe, or table of contents, your franchise business plan will keep your company on track to turn a profit quickly and set up viable franchises today and five years down the road.

A business plan is not a scribble on a dinner napkin, but a formal document you can share with stakeholders, employees, brokers, and others who can help you achieve your vision for expansion. Whether you want to become a regional superstar or a global franchise player, it all starts with a formal business concept that is actionable, data-backed, and reasonable.

The Elements of a Franchisor’s Business Plan

Your strategy may look and feel slightly different from another company’s, but the same basic elements are all present in a well-founded business plan.

Consider these components:

  1. The evaluation. Most experts do not recommend trying to franchise a company until it has a few company-owned locations up and operating. One successful establishment does not indicate success in a larger market. If you have two or three profitable locations, moving forward with a franchise plan makes sense. In addition to profitability, examine replicability. Can you easily (for a low cost) clone the experience of the brand regardless of location or is your staff and community involvement part of the success? If your business and concept meet the evaluation test, then creating a formalized plan to franchise makes sense.
  1. The summary. This element is the first section of the plan, but many business plan producers compose it last. The summary, like a medical journal abstract, should include all the pertinent information illustrated in the plan. Sell the idea of the franchise with powerful language and an airtight argument for why investors should invest, employees should support, and brokers should take you on as a client.
  1. franchsor marketing dataThe data. A great idea is not a reason to start a franchise. A business must have market research that supports the business plan. Include information about demand in the target demographic, geographical attributes in prospective locations, and competitive intelligence. Use information about market growth and predicted trends to create a compelling argument showing why your concept would succeed. Use credible sources from market research agencies, industry associations, and/or analytics platforms to support your market analysis.
  1. The product. Explain the value of the product to the consumer. As a prospective franchisor, you can pull your original business plan product explanation. Think about the offering from the customer’s view. Include information about competitive advantages that will put your brand ahead of other company’s offering a similar brand experience.
  1. The business model. Franchises have different ownership models with varying levels of franchisor participation. As a franchisor, you will need to explain the hierarchical structure of the franchise system, including the local-level and corporate-level structures.
  1. The money. If you present your plan to investors, include information about funding needs. If not, use this section to describe the budget proposal over a period of time, i.e., not just startup costs. Include information about business outcomes you expect to see, when you expect to see them, and contingency plans to manage the risk associated with the venture.
  1. The marketing strategy. In a new market, a franchisor will need to take certain actions to support initial marketing and sales efforts. Create a detailed plan for increasing sales, what you expect from franchisees, and which marketing tactics you expect to use initially and over time.

Many franchises open and close within a few years because the parent company didn’t have a compelling business plan.

Do the foundational work in a business plan to help your franchisees and your brand succeed.



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